TMI Blog2019 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Accordingly, ground raised by the assessee is allowed. - ITA No. 1983/Hyd/2017 - - - Dated:- 20-3-2019 - SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri Ajay Gandhi For The Revenue : Shri Nilanjan Dey ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal filed by the assessee is directed against the order of CIT(A) 1, Hyderabad, dated 23/08/2017 for AY 2013-14. 2. Brief facts of the case are, assessee was employed for a part of the year in USA and paid taxes in USA which includes federal and state with holding taxes. Assessee claimed the same u/s 90 of the Income-tax Act, 1961 (in short the Act ). AO allowed the tax credit to the extent of federa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tata Sons Ltd. (supra). In this case, the coordinate bench held as under: It was indeed an incongruous position that payment of State Income-taxes in US and Canada were not allowed deduction as those were treated as in the nature of taxes 071 income, in terms of the provisions of domestic tax law in India, and those payments were also not being taken into account for granting credit, for taxes paid abroad by the assessee, as only Federal Income-tax was eligible for tax credit in terms of the Indo-US and Indo-Canada tax treaty. If that approach was adopted, the assessee would not get a deduction of State taxes so paid abroad, nor would he get the tax credit for the same, and If those two' propositions were correct, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91 are more beneficial to the assessee vis-a-vis the tax credit provisions in related tax treaties inasmuch as while section 91 permits credit for all Income-tax paid abroad - whether State or Federal, relevant tax treaties permit credits in respect of only Federal taxes, it will result in a situation that an assessee will be worse off as a result of the provisions of tax treaties. That certain Iv is not I permissible under the scheme of the Income-tax Act. Circular No. 621, dated 19-12-1991 issued by the Central Board of Direct Taxes, which is binding on the Assessing Officer under section 119(2), inter alia. observes that Since the tax treaties are intended to grant relief and not put residents of a Contracting State at a disadvantage v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxpayer. In other words, the fact that a taxpayer is entitled to make a particular claim, in accordance with a tax treaty provisions, does not disentitle him to make the claim in accordance with the provisions of the Act. In such view of the matter it was held that the provisions of section 91 are to be treated as general in application and these provisions can yield to the treaty provisions, only to the extent the provisions of the treaty are beneficial to the assessee,' that was not the case so far as question of tax credits in respect of State Income-taxes paid in USA were concerned. Accordingly, even though the assessee was covered by the scope of India US and Indio Canada tax treaties, so far as tax credits in respect of taxes pai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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